WCA Opposes 9.3% WC Rate Hike; Business Council Supports It

On June 28, 2016, the New York State Department of Financial Services held a public hearing on the Compensation Insurance Rating Board’s request for a 9.3% hike in workers’ compensation costs.  The WCA, NYCOSH and others submitted testimony opposing the request, and WCA Chair Robert Grey appeared to testify against the insurer group’s request.

The bulk of CIRB’s filing was based on supposed increases in insurer costs related to permanent partial disability and schedule loss cases.  The WCA pointed out that the facts show that PPD costs have plummeted because of the PPD caps that were part of the 2007 reforms.  The WCA also showed that schedule loss awards have not increased for the vast majority of workers in five years.  For the past several years, only 25% of workers have seen increases in their schedule loss awards as a result of increases in the maximum benefit rate – and those increases have been small and incremental.

NYCIRB contends that indemnity claims are 40% of the claims in the system, and that 28% of indemnity claims involve schedule loss.  This means that schedule loss cases are about 11% of the cases in the system (.40 x .28 = 11.2).  Only 25% of those cases have seen increases in the past four years, which is 2.8% of the claims in the system.  Those increases have averaged about 2%.  As a result, cost increases in schedule loss cases are about one-half of one percent (2.8 x. 02).

Meanwhile, the Business Council of New York State also appeared at the hearing and testified in favor of increasing its own member's insurance costs.  Ken Pokalski stated that "the system costs what it costs," and that employers' rates should be increased to account for those costs.  Pokalski also advocated for drastic reductions in awards for schedule loss and in payment for temporary disability from work, claiming that employers' rates can always be scaled back later, after benefits are taken away from injured workers.

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